What is Capital?

Source: "Socialist Labor Party of America"Translated: by F. KeddellTranscribed: and edited by Robert Bills for the official Web site of the Socialist Labor Party of America. Uploaded by Donna Bills, October 2005Markup: by Chris ClaytonProofread: by Andy Carloff 2010.

I.
Capitalist Fallacies.

Let us take the definition of capital which has hitherto passed muster; not, of
course, that childish definition of Bastiat’s, that capital is “the saved portion of a
man’s income,” for that is manifestly too absurd and ridiculous; but the other
definition that “capital is the instruments of labor”; or the one which is universally
given by all economists, that “capital is hoarded labor”; or, if you like, a third, that
“capital consists of products which are continually applied to further production.”

Now look at this Red Indian in the primeval forests of America, who is out
hunting for his subsistence with his bow and arrow. Is this man a capitalist? Is this
bow and arrow capital? You see all the three definitions are fulfilled. The bow and
arrow are unquestionably an instrument of labor. Nobody, too, can deny that it is
the result of expended labor. What is more, it is a product which is continually used
for further production. Yet it would be flying in the face of common sense to call that
Red Indian a capitalist! You see, therefore, that somehow or other all these
definitions must be incorrect.

Or perhaps you will say—and the man who would say this would say
anything—“Yes, the bow and arrow is capital, and the Indian is consequently a
capitalist.” Then I can easily show you that that bow and arrow is not capital.

Neither is the Red Indian a capitalist.

To make this quite clear, imagine yourself for a moment out in the woods with
just such a bow and arrow. The bow and arrow will serve to shoot game. It
will,—since it is an instrument of labor,—also help you to carry on your work of
providing for your own subsistence. But if, as I am afraid would be the case, you
were to get tired in struggling through the forest with your moccasins on after the
game, you will find no chance to lay out your bow and arrow at interest; and that, as
all the world knows, is the distinguishing characteristic of capital. So you see that
this bow and arrow, after all, is an instrument of labor, but it is not capital.

But assuming, under the impression that it was merely because your bow and
arrow was hoarded labor in the form of bow and arrow that you could not make it do
duty as capital—assuming, I say, that you wished to exchange it, and went, for this
purpose, to barter with our original Indian. Very likely this Indian, if your bow and
arrow suits him, will do a bargain with you. He will give you in exchange, say, a
deer he has killed, or some furs, or, if in a gold-bearing region, he may even hand
you—just think of it!—a great nugget of gold. But you have no possibility whatever
of making profit out of these articles where you are. In order to make these goods
productive—interest or profit bearing—you must just betake yourself to other
countries where matters stand on a very different, in short, on a European footing.
But mark you this: in the assumed historical conditions in which you are placed you
cannot possibly do any such thing. Not only so, but now, with the things for which
you have bartered away your bow and arrow—your game, your furs, your fine
nugget of gold—you are a deal worse off than you were with the bow and arrow,
which would at least enable you to keep yourself—if you shot straight. You can
grasp now—and I advise you to hold fast to it—that there are historical conditions
in which there are instruments of labor, in which you may even barter or exchange,
but in which, nevertheless, there is no capital.

Following, then, upon these explanations which all readers of socialist economy
know well, we can say that, although we have here instruments of labor, there is yet
no capital because there is no division of labor, since the instruments of labor—the
means of production on a very small scale—are in the hands of the laborer himself
or at his command, or, in the other words, labor alone is itself productive. Here,
then, aptly comes the statement that the independent productivity of capital, its
breeding, as Shylock says, its profit-making apart from labor, is possible only under
a system of division of labor, and is the consequence of that division of labor.

II.
Industrial Society in Civilized Antiquity.

Now let us take a look at the condition of civilized antiquity. Here we already
have a certain amount of division of labor and greater wealth, however small it may
be in comparison with ours of to-day. But you can see, in this case, that the ancient
owner of property was the combined possessor of landed property, slaves, and all
the products of labor, as well as of all the instruments of labor. Is this man a
capitalist any more than the Red Indian? Not at all. If you take a Shah of Persia in
olden times, to whom belonged the country over which he ruled to the full extent of
his will together with all the wealth and people in it, would you say that this man
was “a great capitalist”? Most assuredly not.

Just the same with the ancient owners of property. The person to whom belong,
as of lawful possession, not only the instruments of labor, but the very laborer
himself, cannot be a capitalist. His share of the result of the social production comes
to him, not because the instruments of labor belong to him, but because the laborer
himself belongs to him. The slave, by whose agency he allows the labor to be done, is
only another sort of tool for him, and the tool only another kind of slave. This
absence of separation and distinction has for its result that we have here masters,
but not capitalists; articles of value and wealth, but not capital. You can trace this
farther if you bear in mind the determining characteristics of the ancient economy.

The ancient landowner and slaveowner commanded that articles of use for his
own household needs should be produced in the first place. He sold only the surplus
of such articles. Or if he carried on manufacture with his slaves—an exceptional
case, by the way, and one peculiar to citizens of low social rank—he sold the
industrial products so obtained. With the money paid him he purchased articles of
luxury for his own consumption from all the countries within his reach. But he
accumulated the gold remaining over, after his luxurious tastes had been gratified
for the time being, in order that he might purchase luxuries in the future. So much
of it he hoarded, that is to say, as he did not use to acquire more landed property
and more slaves, which served for the extension of that “natural” form of production
in which he was “lord” and “master,” but not capitalist. At first, and indeed long
afterwards, he had no opportunity of laying out this, his gold, at interest in foreign
production.

For this very foreign production was itself the natural growth of the surplus of
another “natural” system of production, and did not call for the modern system of
credit, which can only be set on foot in a society where values in exchange
(commodities) are exclusively produced. When openings for such an investment of
gold begin to manifest themselves, the moral sense of the people—public
opinion—declares against it; this public opinion being in turn only the consequence
of the long continued, and, to all appearance, permanent, economic conditions just
described. You can easily see why usury or interest on capital made way with such
extreme difficulty against the public opinion of the ancients. You can easily
comprehend why it was considered, according to their view, shameful, mean, low,
dishonest, in the ancient sense, to lend at interest.

If Aristotle, Cicero, Seneca, the Fathers of the Church, and the Canon Law, one
and all, consider interest on capital shameful, and meaning the same as usury; if,
under the Roman Republic, the taking of interest was legally forbidden; if Cato
lauds that decision of his ancestors, according to which the thief was fined twice the
amount stolen, but the man who took interest four times the amount; if the Catholic
Church refused to the usurer the sacrament, the right of bequest, and Christian
burial; and if, on the other hand, Jeremy Bentham, and with him the whole precious
school of Liberal political economists, can see in usury only the most indefeasible
and “natural right” of mankind—why, henceforth, surely the reason for this striking
contradiction must stare us in the face, and the discrepancy can be explained with
the greatest ease.

The jurist, say the Roman jurists, “notices only what generally happens.” Still
more true is this of the moral views of the people which grow out of their economic
conditions. They, too, notice only that which generally happens.

Borrowing went on in antiquity as it does with us. But so long as the
inducement and the opportunities for investing loans in foreign production were
lacking—and, as we have seen, this very foreign production was based only on its
own natural economy and the surplus thence arising—loans of money were taken
only for purposes of consumption. They were, therefore, incurred on account of
personal neediness and embarrassment; though this embarrassment might be only
that of the Roman edile, who wanted to deck the circus with purple for the public
games and hadn’t the necessary sum at command.[1]

To take advantage of the need and necessities of a borrower, who devoted his
loan exclusively to purposes of consumption, and was not an atom the richer for it
than he was before he incurred it, is on every ground shameful; and this, antiquity
and the Church have both justly recognized. But loans for purposes of production
are now overwhelmingly preponderant—loans which the borrower at once applies to
productive undertakings. Such a loan is contracted, beyond question, by reason of
embarrassment; but only out of that single and perplexing embarrassment: how to
get richer. And, quite naturally, this sort of embarrassment the lender gladly shares
with the borrower! In other words, the productive loan is, economically speaking, a
share in the profit of the business; and the contradiction between the ancient and
the bourgeois view of the loan-monger and usurer—both of them, observe, arrived at
in consequence of the dominant economic character of loans peculiar to the
respective periods—is thus cleared up by the consideration of the actual historical
conditions. As, therefore, the opportunity for lending money for productive
investment begins to extend more and more in one direction, actual prohibition is
enforced in another; public opinion is increasingly hostile and struggles against its
introduction in practice. The investment of wealth in foreign production (and by its
investment in his own natural sphere of production the investor remains, always
“master,” never as yet “capitalist”) therefore always forms a relatively insignificant
part of the ancient investment of wealth.

“Almost wholly in landed possession, a trifle out at interest.” Such, even at so
late a period as that of Pliny, is the statement of the wealth of a Roman senator.
Even of so proverbially wealthy a man as Crassus, Plutarch says, when he
enumerates his various properties, silver mines, landed estates, agricultural slaves,
etc., “all this is really nothing in comparison with the value of his domestic slaves,
so many and so admirable were they, readers, writers, silver-testers, overseers,
attendants, &c.”

Almost all these slaves were means of enjoyment. The ancient economic system,
which in its active shape is “lordship,” not “capital,” develops into such means of
enjoyment, not into “capital.” There were instruments of labor, means of enjoyment,
values and riches in the ancient world, but still no “capital.” Estimated by this
dominant form of the entire system, there was still no “productivity of capital”
when, for instance, Sophocles makes his slaves carry on a sword factory. In this case
of manufacture with a view to trade the “natural” character of the economic system
first disappears. But, on the other hand, the characteristic of actual personal
mastership remains unchanged in this form of production; and, secondly, this
manufacture is first carried on only in commerce, which, as already stated, is
already sufficiently developed. These slaves now produce all the articles of
consumption which their owner wants in the form of swords, which are exchanged
for those articles of direct consumption; but these swords fulfill their function as
articles of use or enjoyment, or, in the shape of money, act as the means of
purchasing all articles of use or enjoyment, and thus represent only these latter.
But the swords do not yet appear in the form of prolific capital in its own free and
independent productiveness, in its power; that is, of piling up interest for its
possessor.

No doubt the first step is already taken in this manufacture with direct
reference to the value in exchange of what is produced. But this first step itself finds
a stumbling block in the way of its further progress in the shape of the entire social
and economic environment of the ancient world. The wealth and gold of antiquity
formed the capitalist embryo out of which capital itself was later developed. But the
development of that wealth into the specific and individual form of capital had not
as yet by any means taken place.

III.
Industrial Society in the Middle Ages.

Glance at another period of culture. Contemplate the owner of the soil in the
Middle Ages, the noble seigneur with his castles and halls, serfs and subjects,
villages and towns. Was this man a capitalist?

Do not entertain the common, crude notion that in those days people lived on
the produce of the fields alone. Production was then well developed, comfort was
great, the means of enjoyment were numerous, varied and refined. Ulrich of
Lichtenstein in the 13th century, describing a reception by his wife, says she was
clothed in a garment of silk and gold trimmed with ermine: eight women waited on
her, all well clothed; her bedroom had a hundred lights, the mattress was covered
with velvet, and the sheets were of silk. Ulrich, in describing a lady’s wardrobe,
counts up twelve dresses, ten caps adorned with pearls, three mantles of white
velvet, and a saddle white with silver. The lady had twelve pages all clothed in
white, and her horses were covered with cloths of velvet. Was, however, the owner
of all these fine things—was the lord of the Middle Ages a capitalist? By no means,
and I will prove this as clearly of the Middle Ages as I did of ancient times.

In the Middle Ages slavery did not exist, and the serfdom which took its place
gradually softened down to a system of personal bondage, running through many
degrees and stages, until it became a patchwork of services. This gave the Middle
Ages their special feature. The actual living man was no longer regarded as private
property, but particular acts to be performed by him were so regarded. It was a
system of particular services to be rendered, a system of rights due to one man from
another man, and these rights included the performance of particular acts and the
delivery of particular products. This is distinctive of the Middle Ages.

Let us look at the economy of the feudal landlord a little more closely. Apart
from the work of the serfs, we find the fields of the lord tilled and sown by those
from whom socage was due. The services rendered varied in every possible manner
and degree, for the dwellers on the free farms, as well as those on other homesteads
had each and all to do their part; the former worked for the lord from five to six
weeks in the year, and the latter three days a week, without payment.

Over and above the actual work in the fields, let us see what the feudal lord
received in other ways. Let us look at what happened on the day when the dues
were paid. They consisted of rye, barley, hares, bacon, oxen, pigs, eggs, butter, oil,
fruits, wax, honey, etc., etc. Those who lived in the villages and towns under the
sway of the lord had to work for him according to their trades without payment. The
women also paid their dues: pieces of linen, woolen stuffs, etc., etc.; some gave their
work only; others had to find the raw material and to work it up as well.

Nor were the dues confined to mechanical labor or to furnishing material
objects. Advice was due to the feudal lord on all occasions when he asked for it. If
the lord wished to hear a song or see a dance, there were those who had to sing and
dance for him. Taste in those days was rather low, and some of the services that the
feudal lord could and did exact can hardly be described at the present time.

What, then, was this feudal lord? He was a rich, a very rich man; but he
differed from, say, the Rothschilds of the present day, because he could not
capitalize his dues.

The feudal lord could consume, or keep for future consumption, all the means of
enjoyment which the age placed at his command; but he could not employ them in
such a way that they increased; his position rested upon value in use, or, what is the
same thing, upon services, and had nothing to do with exchange value or money. It
is true that he drew interest from part of his wealth, but this was devoted to
procure those luxuries which were not purchased in his own country. Even if he had
superfluous money and interest he could not capitalize and increase them by
employing them in the production carried on in his own country; for everything was
so neatly and regularly arranged, so stable and immovable in this system of
services, where labor, duties and burdens were so accurately defined that there was
no possibility of change.

Superficially, the burghers and masters in the cities and towns of the Middle
Ages would appear to have been in a very different position from that occupied by
the noble landlord; but, as a matter of fact, we find the same social arrangements
bringing about the same results. Let us look at the later part of the Middle Ages,
when the guilds had reached their highest development. The master in a guild,
whose right to be a master could rest either upon his father having belonged to the
guild, or upon his being a citizen, or upon any of those circumstances with which in
the Middle Ages the right to become a master was bound up—the master pursued
his craft in virtue of a particular right. He stood, therefore, on the same footing with
the landlord so far as what they both owned was based on particular rights, whilst
the factory lord of to-day exercises only a business relationship. But if this master
were privileged, if he, as a particular individual, possessed particular rights, then of
necessity there were others around him who had also their particular rights, which
limited and circumscribed the rights and privileges of each and every master at
every point.

In this idea we find the source of the innumerable regulations of the Middle
Ages which determined what particular material the master should use, what plan
of work he should follow, the hours of work to which he should be limited, the wages
he should pay, the quality he should make, the prices he should charge, etc., etc. All
this and more is to be found in the statutes and decrees of the Middle Ages.

The master has the privileges of a master as a particular individual, and he
stands face to face with two groups of equally privileged individuals. In the first
place we have the group formed by all the other industries or crafts, the masters of
which also have their rights; and for this reason no master can unite two industries,
however closely related they may be, or however beneficial to production their union
might be. In the second place we have the group formed by other masters of the
craft, and for this reason no master is allowed to employ more labor than any other
master in that craft; that is to say, the number of apprentices in every town and in
every craft is duly determined and settled. These two limitations rendered the
capitalization of the produce of industry in the Middle Ages impossible.

In the Middle Ages, therefore, the industrial classes and the landed classes
stood on practically the same economic footing: what was produced could be
consumed or be kept for future consumption, but could not be used as capital. There
was, however, one particular point at which we find capital commencing to develop,
namely, in the world-commerce which was carried on principally through Venice
and with the East. Here the limitations imposed by the statutes of the Middle Ages
broke down and exercised little or no influence; for, even so long as they remained
in force, they failed to reach the productive power of capital at its root.

When the way to India round the Cape of Good Hope was discovered by the
Portuguese, the rich family of the Fuggers, of Augsburg, sent an expedition thither
on which they made a profit of 175 per cent. The profits of the world-commerce were
enormous, and to them must be added the gains of the usurers, who, in the Middle
Ages, carried on their business through mortgages and advances on agricultural
products.

Thus what was in embryo in ancient times developed in the Middle Ages and
became full-grown capital. The tendencies of the time, the rise of the Middle Class,
were all in the direction of invention and discovery, of division of labor, of economy
in production, increase of sale, that is, in the direction of developing and perfecting
those instruments and aids of production which were powerless in the olden times.

Thus, gradually, capital threw off the fetters that had hitherto confined it, and
at the end of the last century all limitations and regulations of the period of rights
and services had disappeared, free competition was assured, and capital appeared
in its gigantic strength. “Liberty,” as the middle class understood it, was
established; each and every one was free to become a millionaire—if he could!

A single glance at the distinctive features of this period will show that they are
all summed up in “free competition.” The bourgeois producer, in industrial as well
as in agricultural production, knows nothing of particular rights. All the
distinctions and conditions which arose out of the recognition of “rights” have
disappeared; in their place we find the one essential condition: that of having
capital in hand to make the necessary advances without which there is no
production. All the old limitations having been removed the principle of division of
labor comes to the front and production is divided up into a never-ending series of
partial operations and of production for the world-commerce. All is now exchange
value; everyone produces that which he does not want and cannot use; and, as
opposed to the services and the production of value in use of the Middle Ages, we
have now the products of industry exchanging with each other in the money form.

This is as much the case with agricultural as with industrial production; for the
latter form stamps the character of the age. Anyone who now, for example, produces
corn does so not for his own consumption, but for the world market; and he can no
longer discharge his liabilities with the product of his work, whether he uses large
capital and incurs great expenses, or is only a small producer with liabilities that
press even more severely upon him; he depends upon the prices quoted in the great
markets of London, Paris, Berlin, and Amsterdam; so that even in the supply of food
he produces only exchange value and the production of use value sinks into a
shadow.

IV.
Industrial Society under Capitalism.

The law of Ricardo that the prices of products are regulated by the cost of
production is now in full force. In the Middle Ages prices were fixed by the producer,
who could always insist upon a regular profit. But under the influence of capital all
this is altered. Each one underbids the other to obtain fresh custom or to retain that
which he already has. For the consumer this is a benefit in the shape of cheapness.
But this lowering of prices is only obtained by an increase of sale; the small profit
obtained on each article is only compensated by the sale of a larger number of
articles. The natural result is that production is carried on upon a larger scale, with
greater concentration of work, larger supply of raw material, and an augmented
output. In other words: under free competition the greater the capitalist the more
he overpowers and swallows up smaller capitalists.

Here we have the productive power of capital; the pound of to-day produces
another pound. Here also we find the origin of our complicated system of credit; the
capital which is in excess of the requirements of a business, whether temporarily or
permanently, is employed by way of loan, partnerships, shares, etc., in other forms
of production.

Up to the present we have regarded the producer simply as a producer. Let us
now look at him in his two capacities: employer or contractor, and worker; and
distinguish the particular features which free competition imposes. The fate of both
is determined by the price of the product in its sale, and by the proportion of it
which free competition gives to each. The value of the product is at first to be found
in the market price; that is, it depends at each and every moment upon the relation
between the supply of the article and the demand for it. But this in its turn is
subject to the fundamental law that, in the long run{,} the price of a product is the
same as its cost of production. Say, for example, that the supply of an article is so
great that the price falls below the cost of production, then the production of that
article will either cease or be moderated; on the other hand, if the price of an article
be so high as to yield more than the usual profit, then by virtue of free competition
capital will be attracted to that particular industry, and the supply will be increased
until the price is brought down to the cost of production.

The market price of a product oscillates like a pendulum, but with great
irregularities, and its many changes very often have unpleasant and ruinous
consequences for the individual capitalist; for he may be forced to sell his wares
when prices are low and may not be able to place his wares on the market when
prices are high. But this only concerns the individual; the capitalist class, as a class,
is not affected by it; for it is at such times that the smaller capitalists are crushed,
and the supremacy of large capitals over small capitals is established.

As regards capital, these oscillations in prices compensate one another on the
average, and not a single hour of labor, not one drop of the sweat of the worker is
lost to capital; they are all paid back to capital by the consumer. If this be the
position of the capitalist as regards the consumer, what is it that determines the
proportion of the proceeds of the product which shall come to the worker? What is it
that determines and settles the wages of the worker?

Under the present system of production the average wages are limited by an
iron law to the necessary means of subsistence, to the minimum of food, etc. This
has been disputed by certain political economists. In opposition they assert that the
price of labor is regulated by the demand for it as compared with the supply of it.
The people who assert this look upon labor as they do upon any other kind of
merchandise, and they do this quite rightly, for it is with labor as with merchandise
or wares, its price is determined by demand and supply. But what is it that
regulates, that determines, the market price between demand and supply? As we
have already seen, this is determined by the cost of production. There is only one
measure for everything that comes on the market, whether it be Chinese porcelain,
American cotton, asafetida, Circassian slave-girls, or European workers; that
measure is to be found in the demand for and the supply of the article, and the
average relation of demand and supply is ultimately determined by the cost of
production.

How much, then, does it cost to produce a worker? Evidently just so much as is
required to enable another worker to obtain the absolutely necessary means of
subsistence for himself and his family. Give him this and he will provide the
youngster fast enough, though not solely, perhaps, for the capitalist’s sake, and will
not even require to be tempted by a profit, as do the producers of other wares. In
short, wages under free competition, or the cost of production of labor, consist solely
of the cost of producing workers.

Where it is customary to employ children in the factories, then a fresh
calculation is made. It is very soon found that the father does not require the means
of subsistence, say, for a family of average number, but can do with less, as the
children themselves contribute towards their own support.

It requires no explanation to show that of all producers the seller of labor is
most unfavorably situated under the system of competition. Where would the sellers
of other wares be if they could not keep their produce back when the demand was
slack? The seller of labor cannot do this. He must sell. Hunger compels him.
Further, when the price of labor rises, it only makes the lot of the workers
ultimately worse, for it brings about an increase in the number of the workers.
Neither need we explain how it is that no charitable employer can alter this.
Whoever attempts to do so is struck down by the dagger of competition.

Under free competition the relation of an employer to the employed is the same
as to any other merchandise. The worker is work, and work is the cost of its
production. This is the leading feature of the present age. In former times the
relations were those of man to man: after all, the relations of the slaveowner to the
slave, and of the feudal lord to the serf, were human. The relations in former times
were human, for they were those of rulers to be ruled; they were relations between
one man and another man. Even the ill-treatment of the slaves and serfs proves
this; for anger and love are human passions; and those ill-treated in anger were still
treated as men. The cold, impersonal relation of the employer to the employed, as to
a thing which is produced like any other ware on the market, is the specific and
thoroughly inhuman feature of the Middle Class Age.

The Middle Class hate the idea of a State; they would replace the State by a
Middle Class society permeated with free competition; for in a State, workers are
still treated as man, while under the Middle Class regime the workers are like any
other merchandise, and are only taken into consideration according to the cost of
production.

Ancient civilization is shown by what Plutarch wrote of Marcus Crassus and his
slaves: “He (Crassus) used to attend to their education and often gave them lessons
himself; esteeming it the principal part of the business of a master to inspect and
take care of his servants, whom he considered as the living instruments of economy.
In this he was certainly right if he thought, as he frequently said, that other
matters should be managed by servants, but the servants by the master.” Contrast
this with the words of a Liberal professor: “Swiss manufacturers boast that they can
manufacture at less cost than the Germans because the Swiss have no compulsory
education.”

We have seen that wages, on the average, are reduced to the necessary means
of subsistence. But if this be the reward of labor, what becomes of the excess of
prices paid for the articles produced over the cost of subsistence of the workers
whilst the articles are being made? This excess is divided between the employer and
other capitalists, pure and simple, such as the holders of land, bankers, etc.

We said that there is not a single drop of the sweat of the workers that is not
paid back to capital in the price of product, and that every pound in the hands of the
employers produces another pound. With this increase the power of capital
increases, so that every effort of the workers enables the capitalist to compel the
workers to further toil. And when it is possible to reduce the prices of the products
and thus cheapen the means of subsistence, then the increase of the workers does
not increase with the increased produce of labor, but the power of capital does.

Take all those who have worked together in the production of some
article—those who have worked with their brains as well as those who have worked
with their hands; add together what they have received for their work, and they will
not be able to recover the product of their labor! And when machinery is employed,
thus causing a greater production with the same amount of labor, then it becomes
more and more impossible for the workers to buy back with their wages the product
of their work, and they become poorer and poorer.

But the capitalists say that the profit of capital is really the recompense of the
brainwork of the capitalist, the reward for his management. In reality, however,
only a very small portion of the income of the capitalist can come under this head;
and the English economists have always treated the profits of the employers as the
premium of capital, and have left unnoticed the reward for brain work on account of
its smallness. If you want to know how small it is, look at the salaries paid to
stewards of estates, to managers of factories, etc., etc., who do the brain work, while
the principals travel for pleasure or attend to other matters. Only the amount so
paid for management can be regarded as the recompense for such work when the
employer or capitalist does this work himself. This feature is still more strongly
marked in the case of railways, joint stock banks, and industrial companies. Here,
those who possess the capital are many, and they live on their dividends, whilst the
“brain work” of the business is being done by salaried officials. Of course, some of
these salaries are absurdly high; but take them all together and compare the total
with the amount paid away in dividends, and then you will have some idea of the
smallness of the amount paid for brain work and management.

Say that the total amount of the produce of labor during one year is £100,000,
and that the cost of the subsistence of the workers—in other words, their wages—is
£20,000. Now whether the employers are sharp or stupid, idle or industrious, the
remaining £80,000 will fall to the share of the employers, as a class, and how much
each individual employer will receive will depend upon his personal qualities.

Economics can only deal with the question of how much of the produce of labor
the employers as a class can obtain for themselves, how much the workers as a class
can obtain for themselves, and what quantity of the products of labor the individual
worker can obtain. The question as to how one individual employer can get more for
himself than other individual employers is really a part of practical business, and in
no way comes under economics. All this shows that capital is not ever-present, that
it is not a law of nature, but is the effect of certain historical conditions; and that its
productivity in altered surroundings must and will disappear.

Let us contrast the commencement of this historical analysis with the end. In
the primitive state of individual, isolated labor with which we commenced, the
instrument or tool—the bow and arrow of the Indian—was in the hands of the
worker, and thus work alone was productive. Under the system of division of labor,
work and production became social, although the distribution of the result of the
work remained individualistic; and through division of labor, the system of
exchange values and free competition, this result is rapidly brought about, viz.: the
separation of the instruments or tools from the worker becomes complete, the
productivity of labor is appropriated by the holders of the tools, and the reward of
the worker is reduced to that which will keep him alive whilst he works.

Formerly labor was productive; now the instrument is alone productive. The
instrument of production which has been snatched from the worker, which has
changed parts with the worker, is capital, the worker has become the dead,
unproductive instrument, while the instrument now alone is productive.

Division of labor is the source of all fortunes. The only economic law which
forms a parallel with a law of nature is that production can only become more
productive and cheaper by division of labor. The law is, so to say, a social law of
nature. A handful of individuals have appropriated the social law of nature, and
used it for their individual benefit; the masses are bound with the chains of the
ever-increasing products of industry and virtually receive in return for their labor
no more than the Indian did under favorable circumstances before civilization
commenced. Just as well might these individuals appropriate the force of gravity,
the power of steam, and the warmth of the sun. They feed the people, as they oil
their machines, to keep them in good working order, and the food of the people is
only an item in the cost of production.

We have learned from the great English economists that the consumer pays for
the work of man, and not for the forces of nature, but we have also learned that this
payment for the work of man reaches the wrong quarter; the work of man is paid
for, but the worker is not paid, and has to be content with the necessary means of
existence, that being all that capital will allow him. Capital has not appropriated
the sun, but it has possessed itself of the division of labor and its constantly
increasing productivity. After all the sun was made by no man, and is the property
of no man; but capital is grasping the advantages of the social law of nature,
constantly appropriating the produce of the labor of others, and has turned the
power of work into private property. Thus a social state of property has arisen in
which each calls that “his” which is not the product of his labor.

* * * * * * *

But the profit of capital is the reward of abstinence. Truly a happy phrase!
European millionaires are ascetics, Indian penitents, modern St. Simon Stylites,
who, perched on their columns, with withered features and arms and body thrust
forward, hold out a plate to the passers-by that they may receive the wages of their
privations! In the midst of this sacrosanct group, high above its fellow mortifiers of
the flesh, supreme ascetic and martyr, stands the Holy House of Rothschild. That is
the real truth about our present society! How could I have hitherto blundered on
this point as I have?

What debauched rascals, what impure rakes, the workers must be, since they
manifestly receive no reward of abstinence. Doubtless the truth is that these are
they, not the others, who secretly keep mistresses and own villas and country
houses where they indulge in frightful orgies!

But, joking apart—for it is no longer possible to jest about this, and the
bitterest irony involuntarily breaks into open revolt!—it is time, it is high time, to
drown the squeaking pipe of these eunuchs by the deep voice of a fully-developed
man. Is it possible when the profit of capital is due to what we have seen, when
capital is the octopus which sucks up the entire surplus of the toil and sweat of the
worker, leaving him only what are the bare necessaries of existence—is it possible
that any one can still have the courage to speak in the presence of the workers of
the profit on capital as the reward of abstinence of capitalists who mortify
themselves? Yes, there are those who still have the hardihood to flout the workers,
to insult these luckless proletarians, with these jeers, with these monstrous
sarcasms. Has conscience, then, died out from among us? Has shame taken refuge
with the brutes?

The End.

Notes

1. In the days of small production, the usurer was simply a leech, who profited by the distress or the
improvidence of others to suck their blood. The money which he loaned to others was, as a rule, put
only to unproductive uses. If, for instance, a nobleman borrowed money, he did so to spend it in
debauch; if a farmer or mechanic borrowed money, it was mainly to pay his taxes, or some other
government dues; neither, as a rule, needed any money for productive purposes: they owned their
own instruments of production, or acquired them by barter. In those days interest was considered
immoral, and was everywhere condemned.—The Capitalist Class, p. 2. New York: New York Labor
News Company.